A Truck Maker With Zero Revenue Scores $7.6 Billion Return for Early Backers
A Truck Maker With Zero Revenue Scores $7.6 Billion Return for Early Backers
(Bloomberg) -- It may have zero revenue, but Nikola Corp.’s stock surge has rewarded a few early believers with 10-figure gains on paper.
Six investors have positions in the truck maker totaling $8.3 billion after investing about $650 million combined, according to an analysis of filings by the Bloomberg Billionaires Index. They include the Agnelli family’s CNH Industrial NV, with a $1.6 billion holding; $1.3 billion for Jeff Ubben’s ValueAct Capital Management, and $1.4 billion controlled by South Korea’s Hanwha Group.
There’s also the firm’s first backer: Worthington Industries Inc., the metals manufacturer where Nikola founder Trevor Milton used to work. It gave Milton a $2 million seed investment when he left to set up Nikola and now holds a $1.2 billion stake.
“We have been repaid that capital, so our cost basis is zero,” Worthington spokeswoman Sonya Higginbotham wrote Tuesday in an email.
In an interview last week, Milton said he used the $2 million during the first year to cover payroll before bringing in additional investment.
That included a consortium led by Thompson Machinery Chief Executive Officer DeWitt Thompson V, which controls a $1.4 billion Nikola stake, and Germany’s Bosch, which owns $1.5 billion of shares.
Thompson said the focus should be on Nikola’s ambitions and its workers, not his investment. “They deserve the real recognition.”
The value of these stakes has fluctuated wildly since Nikola’s reverse merger earlier this month with VectoIQ Acquisition Corp., and skeptics have questioned whether the company will sustain its lofty market value. Short-seller Andrew Left of Citron Research predicted Nikola shares, which climbed as high as $93.99 last week, would fall to $40 in a month. The stock rose as much as 8% before the start of regular trading Wednesday after closing at $62.93 Tuesday.
“I wouldn’t be surprised if they never get a truck on the road,” Left said.
Nikola’s backers are not fazed.
“We believe in the possibilities of a hydrogen-based powertrain and infrastructure,” said Bosch spokesman Tim Wieland. A CNH representative said it’s a “long-term, strategic investment,” while Ubben isn’t even focused on the trucks: “One of the keys to understanding Nikola is to view it as the energy company of the future,” he said. “There is tremendous value in the hydrogen stations.”
For Hanwha, which has the right to supply solar electricity to Nikola’s hydrogen-charging stations, it’s about having a common objective. “Nikola’s goal of achieving zero emissions is in line with what’s envisioned by Hanwha,” the company said in a statement last week.
Milton and his senior managers are doing fine, too. The founder, along with CEO Mark Russell and Chief Financial Officer Kim Brady, own a combined $9.5 billion of stock and options.
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